Johnny Ch Lok

Unemployment Factor And High Crime Relationship Johnny Ch Lok

Classical economists believe that any fall in Real GDP will be temporary and will end when labour markets adjust to the new price level. Classical economists argue that if there is a fall in AD then, in the short term, there will be a fall in real GDP However in the great depression of 1930s Keynes was very critical of this classical view he said that the long period of negative growth showed that markets do not automatically clear he argued that this was for various reasons.1. Wages are sticky downwards. Firms should cut wages to reflect lower prices but in reality, workers are very resistant to cuts in nominal wages.2. If wages were cut in response to unemployment, workers would have less spending power, therefore AD would continue to fall.-Can economic crises bring rise in crime ?Crime may peak during economic crises, During periods of economic stress, the incidence of robbery may double, and homicide and motor vehicle theft also increase. While a consistent relationship between specific crimes and specific economic factors could not be established, the evidence shows that crime is linked to the economic climate. Such findings are consistent with criminal motivation theory, which suggests that economic stress causes an increase in criminal behaviour. The available data do not, however, support the theory of criminal opportunity, which suggests that decreased levels of production and consumption may reduce some types of crime, such as property crime, by creating fewer potential crime targets."The presence of youth gangs, the availability of weapons and potential targets, drug and alcohol consumption and the effectiveness of law enforcement all play a significant role in enabling or restraining overall crime levels",